| Smart Momentum is a proprietary trading system used
for short term exposure in the major currency markets.
In outline, the system uses considerable computing
power to generate millions of “indicators” from
historical data in time series form. These indicators
are assessed and successful ones are used in aggregation
to predict near term movements. As correlations fluctuate,
indicators are rotated to use the best available.
All trading is systematic avoiding the influence
of human emotion.
The target of return is circa 6%-7% unleveraged.
Leverage of up to 20 times may be available. Currencies
are traded in Euros, Dollars and Yen. Average trade
length is 12-24 hours.
Risk Management is paramount and is managed at many
levels, principally:
During times of low indicator correlation or abnormally
high market volatility, Smart Momentum automatically
reduces the level of market exposure.
Smart Momentum apportions the investments across
all currency pairs equally, thereby reducing risk
by diversification.
A strict stop loss policy is applied to each trade.
This reduces the possibility of significant losses
arising through event risk.
Smart Momentum is neither trend following nor mean
reverting, although at times it can be either. It
is also not discretionary.
The main philosophy is one which states that if
it can identify recent market characteristics in
the form of indicators then, providing these characteristics
remain fairly stable, it can use them to predict
near term movements. When market characteristics
change, then it steps away and waits for stabilisation.
A full explanation of Smart Momentum is available
from the book, “Smart Momentum” by Hugh
Clark, published by John Wiley Inc. in 2001 and republished
in 2003.
Investment products available utilising the Smart
Momentum System include:
Managed Currency Funds
Principal Protected Currency Funds
Individual Managed Accounts
Leverage can be used to enhance returns without the
need for physical borrowing. It should be noted that
whilst leverage presents the opportunity for increased
returns, it may also result in larger losses in adverse
market conditions.
The above programmes are available to investors who deem themselves appropriate for this type of investment and are able to sustain the possible loss of some or all of their initial investment. For this reason investments should only be undertaken with risk capital. The definition of risk capital is funds that are not necessary to the survival and wellbeing of the user and therefore the investor should not invest money that they cannot afford to lose.
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Introduction
